Synopsis

This Element is an excerpt from Technical Analysis Plain and Simple: Charting the Markets in Your Language (9780137042012), by Michael N. Kahn, CMT. Available in print and digital formats.

Technical charts demystified: why they work, how they work, and how to get started with them.

Patterns on charts are not random apparitions. They are formed when real people, acting in their self interests, buy and sell stocks, bonds, currencies, or commodities in pursuit of financial gain. They act, that action is recorded, and the sum actions of all participants form the patterns we see. Period. There is no conspiracy and there is no randomness.